Alkries LLC always says the same thing to clients who want to gain a foothold in their respective industries and later carve out a share of the market: they should identify their target markets.
A target market is a segment of your audience that shows a high level of interest in your products and services. It’s a group of people with shared characteristics or traits that make them your business’s ideal customers. Your business’s target markets are people whom you think will use, enjoy, and benefit from your products and services the most. Target markets don’t have to be current customers, but they have a high potential of becoming loyal patrons of your products and services.
The Benefits of Targeting Audiences for Campaigns
Must you specify a target market? The short answer is yes.
Marketing to an audience is like taking someone out on a date. You want to woo the person with the right words and inducements. The evening could end badly if your date doesn’t find your approach enticing or relatable. It’s therefore critical to know who your market is.
Focusing on a target audience enables businesses to:
- 1Develop an effective marketing strategy.
- 2Compose more effective brand messaging.
- 3Maximize advertising spend by showing ads to audiences with high conversion potential.
- 4Maximize time and resources by nurturing high-quality audiences and turning them into brand ambassadors.
- 5Eliminate segments with dismal conversion potential.
Is There a Limit to the Number of Target Markets?
A large enterprise (e.g., a clothing store that stocks items for men, women, and children) may have several target markets. However, small- and medium-sized businesses with a limited product or service list are better off focusing on one or two target markets. It would be more cost-effective, especially if you decide to do search engine optimization and launch paid ads.
Targeting everyone at once is wasteful. If you try to reach high-quality audiences (people with high potential to buy) and low-quality audiences (people who are unlikely to buy no matter how much you promote a product) at the same time, your resources would be spread thin and yield irregular returns.
Here’s a simple example: A local restaurant in the US spends $200 on Google Banner Ads. Its owners want to reach as many people as possible, so they don’t set geographic restrictions on the campaign’s target audience. As a result, Google Ads shows the advertisements to Internet users all the way in Canada. Let’s suppose the ads made the Canadian segment of the audience curious, so they clicked on them even though there’s no way they could dine in the restaurant.
The campaign’s budget breakdown ends up looking like this:
- $150 goes to clicks from US audiences (possible customers).
- $50 goes to clicks from Canadian audiences (no chance of conversion).
In this example, the restaurant loses $50 to non-converting clicks. If the owners limited the ad campaign to audiences who live in the same city, however, they could have reached more potential customers with their entire $200 budget.
Case Study: Target Audiences Generate Higher Returns
In paid advertising, targeting qualified consumers can yield more returns than casting a wide net. Jon Loomer, a Facebook marketing strategist and coach, demonstrated this in 2013. He conducted a case study where he spent $207 on six campaigns targeting his Facebook fans. He got 129 conversions and earned an impressive $9,491.50 in total revenue.
Loomer then created another campaign. This time, he targeted non-fans. He spent $52.23 and created 14 variations to try and attract them; but, for all his efforts, he got zero conversions.
Does this mean you must exclude non-fans from your marketing efforts? The answer is: no.
You can still make a bid to at least make them aware of your brand. Just don’t target them alongside your loyal customers in one campaign. You’ll end up with a generic promotional message that’s too shallow for your existing customers and not convincing enough to reel in a new crowd.
Identifying Your Target Market
Having established the importance and uses of having a target market, we’ll now to get to the meat of the matter: identifying your target market. It’s a research-intensive process that requires data gathering and careful deliberation.
We recommend consulting with marketing professionals if this process is new to you. Alkries LLC, for one, will help you filter out biases and assumptions, so you’ll have an accurate picture of your target market.
Let’s get started.
The Systematic Way: Creating Customer Personas
A widely-practiced method of identifying target markets is coming up with customer personas. When done correctly, customer personas can help decision-makers understand their businesses better. It will also guide marketing teams in designing campaigns that catch attention and generate conversions.
Assess your products and services.
Who are the people who’ll find them most useful? What are the specific needs your company can fulfill, or problems your products and services can solve? Consider also your price range; it alone can narrow down your target market considerably.
This part of the process can be subjective. It is reliant on the information you have and your assumptions about the quality of your products and services. To get an accurate perspective, you must also take a look at the people who’re currently patronizing your business.
Profile your existing customers.
Who are the majority of the people who buy your products or pay for your services? What are their common problems, and what drives them to seek you out? When and where do they buy from you most often? The answers to these questions will make up the core characteristics of your target market.
Create customer personas.
Use the answers to the questions above as a basis. Theoretically, customer personas mirror the profiles of your current customers. If there are significant discrepancies, it could mean any of these things:
- Your assessment of your target market is skewed, and you might have to retrace your steps.
- Your branding is on track, but your current marketing strategy is lacking. It’s why you’re not yet reaching a respectable number of your target market.
- Your current marketing strategy doesn’t deliver your brand message accurately. As a result, the people coming into your store or asking about your services are not the ones who can give you brand loyalty and repeat sales.
You can find out where you stand by meeting with your marketing team and deciding once and for all on your branding and ideal target market.
Get into the details of your customer.
Once you have personas, it could be easier to come up with promotional and advertising campaigns. After all, you’ll know which language or value proposition will speak the most to your customer personas. Dig deeper.
Go as far as identifying the following attributes of your personas:
- 1Age range.
- 3Marital status.
- 4Cultural or ethnic background.
- 5Educational attainment.
- 6Values and beliefs.
- 8Salary range and discretionary income.
- 10Pet peeves or pain points.
If your business targets a broad market, you may have different personas who share one or two pain points.
For example, a lawn mowing company’s client personas can be a 35-year-old wife and mother of two. Her husband has a nine-to-five job, and he rarely has time to mow their front lawn. The company’s second persona could be a retired couple over the age of 65. Unfortunately, due to arthritis, they can’t stand or walk for a long time, much less push a heavy mower across their yard.
A homemaker and retirees — they are different groups of people, but they have one thing in common: they need someone else to mow their lawns.
Do market research.
It’s not enough to focus on the crowds your competitors are targeting. Also profile the customers your competitors are missing out on, and whom you think can benefit from your products and services. They are unclaimed markets, and if you’re quick on your feet, you could make loyal customers out of them.
To give you some context, let’s consider a jewelry store that specializes in women’s jewelry.
Many of the store’s pieces are precious stones set in sterling silver, platinum, or gold. Clearly, these aren’t jewelry for young girls (Products).
Upon observing the people who enter the shop, the owner realizes two things. First, women, young and old, eagerly enter the store to look at the pieces. Second, Husbands and partners sometimes accompany them. The owner also reviews previous sales records and finds that while most women choose the jewelry, their husbands and partners often pay for them. After doing a bit of market research, the owner also finds out that according to that research, men in the United States earn more than women (Customers).
More recently, however, the owner notices that more women are starting to buy their own jewels. Also, when it comes to engagement rings, young couples tend to choose more affordable diamond rings (Market Trends).
Given this information, the owner comes up with three broad classifications for customer personas:
- Career women looking to add to their existing jewelry collections or assemble a personal collection.
- Middle-aged men, married or in a relationship, looking for special gifts for their wives, fiancés, or girlfriends.
- Millennial couples looking for diamond engagement rings priced at $3,000 or less.
The jewelry store owner can create more detailed personas that fall under these three categories.
The Quick Version: Audience Funneling
A quick way to narrow down your target market is to use a funnel approach. The beauty of this method is that it doesn’t rely on existing customer data, but focuses instead on who you think are the ideal customers who can bring the most revenue to your business.
It begins with a broad category and gradually trims down the target market based on the qualities that make up the “dream customer.”
Let’s say you own a salad bar franchise in Virginia. The first stage of your funnel could be based on geographic location: people who live in the same city as your business. The second could be background- or profession-driven: professionals and college students from upper-middle-class families. Next could be food preferences: people who eschew fast food for energy bowls and healthful snacks.
By filtering a broad audience through these three levels, your target market would be health-conscious students and professionals in Richmond. You can even trim the category further and target Richmond vegetarians for your no-meat salad bowls.
The funneling technique is flexible, however. You can end up with more than one target market, depending on your marketing goals. For instance, in the example above, you can have two target markets for your salad bar franchise: vegetarians and non-vegetarians. You can design two ads, each highlighting a value proposition that appeals to each target audience (e.g., available meat substitutes for vegetarians, and bacon and chicken toppings for meat lovers).
Useful Tools for Target Market Analysis
At this point, some of you might feel that identifying target markets involves a lot of work. To ease your worries, here are three tools that will help you understand your online audiences better. They help you make deductions about your target audience’s backgrounds, needs, and preferences.
- Quantcast – A free tool that provides data on your website visitors, like geographic origin, gender, and traffic trends.
- Alexa’s Audience Overlap Tool – This tool reveals the other sites your target audience visits. It offers hints on your target audience’s interests. The Audience Overlap Tool also provides insights on gender, age, ethnicity, and other key characteristics.
- Google Trends – A free tool designed for marketers, Google Trends reveals keyword search patterns over time. It also provides relevant keyword suggestions, which can be a source of information on topics that are relevant to your target market.
- Ahrefs – This tool is different because it doesn’t provide insights on your website visitors. Instead, it shows which websites are linking to yours. This can be helpful for identifying businesses or industries that are interested in your products and services.
Knowing your target market is necessary for any business to succeed. It is a crucial component in marketing as well as in product development. When you have a clear understanding of your customers, you’ll know how else you can fulfill their wants and needs.
If you need help analyzing your audience’s buying behaviors, creating customer personas, or narrowing down target markets, Alkries LLC will be happy to assist. We can perform online data gathering and interpret data so you can have a clear idea of who your ideal customers are.
Consult with our marketing professionals. Get in touch with Alkries LLC.